Breeders Trust wins arbitration case illegal trade in undersized propagating material to Germany

Breeders Trust has been vindicated in an arbitration case against a Dutch seed potato grower who has been shown to have illegally sold undersized potatoes as propagation material to Germany. The case is of importance because this verdict is unique in the seed potato sector, says Geert Staring, general director of Breeders Trust, based in Brussels. Potato growers and trading companies now know what to expect when undersized potatoes are illegally sold as seed potatoes.

The case in question had been pending since 2011 when Breeders Trust brought it before the NAO (Dutch Organisation for Potato Traders) Arbitration Committee and the verdict has recently been issued. The NAO Arbitration Committee deemed it sufficiently proven that the seed potato grower violated the contractual conditions by illegally selling small potatoes as propagation material to a German company in 2010. The NAO Arbitration Committee has decreed that the potato grower is subject to a so-called obligation regarding means. Geert Staring explains: a surgeon cannot guarantee that the operation will be successful, but he is obligated to perform his occupation in a competent manner.

What this mean in the case of this illegal seed potato transaction is that the NAO Arbitration Committee is of the opinion that a seed potato grower is obligated, regarding the sale of potatoes of which it has been contractually determined that these may not be traded as propagation material, to exert him/herself to ensure that this does not in fact occur. The NAO Arbitration Committee deemed it sufficiently proven that this obligation regarding means has not been fulfilled in this case.

Though the seed potato grower in question did indeed have permission from the seed potato trading company to sell undersized seed potatoes, this was on the express condition that they would not be used as propagation material. The seed potato grower was subject to an obligation to be sufficiently sure of this matter. By neglecting to do this the seed potato grower has deliberately contributed to the trading in uncertified, undersized propagation materials. The NAO Arbitration Committee was of the opinion that the intentions of the buyer were, or should have been, sufficiently known to the seed potato grower in question. These intentions were clear from, among others things, the sales price, which was double the standard market rate for small ware potatoes at that time. In addition to this, supplementary questions from an, until then, entirely unknown German party regarding the suitability of the potatoes on offer as propagation materials indicate that the seed potato grower was aware of the risk of committing a breach of contract.

Geert Staring is pleased with this verdict. The seed potato grower in question has failed to fulfill the obligation regarding means and can be held accountable. The grower was obligated to ensure that the small potatoes were not used as propagation material. The verdict is of importance because it clearly indicates that seed potato growers who sell undersized propagation material can be held (partially) responsible in the event that the potatoes are nevertheless put to propagating use by the buyer.

The entire legal proceedings took 2 years. The NAO Arbitrating Committee has determined that the contractual fine in relation to the trading of a total of 7.840 Kg. of small potatoes as propagating material will be set at € 15.000,-. To be increased with the legal interest starting from December 10th 2010 and the arbitration costs of € 6.500,-.


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